Yearly Archives: 2009

Walking Away From Debt

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Rich defaulting on their mortgages

I read an interesting article on msn.com today (Click Here for the msn article) about the rich walking away from their mortgages.  Some are even double dipping, they stop paying on their mortgage and if they have a line of credit, sometimes they pull all of that money out too.  The msn article calls these defaults, “strategic defaults”.  In California, the strategic default cases increased by 68 times from 2005 to 2008(not percent! times… WOW)

What if you lived in an area that had a financial perfect storm kind of occurrence?

Okay, what if you do live in one of the real expensive areas of the country (parts of California,  Florida, etc), where the value of your house has lost more than half it’s value?  What if you find a house that is a bigger better house than your, and it was in foreclosure in a great area, and discounted by 50%?  So now you have the possibility where you can buy a bigger better house for less money than you paid for yours…  And one that will probably double in 5 years when all of this mess is behind us (hopefully…).  That can be pretty tempting!

Hmmm, the financial logic is:  I’ll buy that bigger house in the more prestigious area that was foreclosed on for half price it was originally, then let my house go into foreclosure.  If after 5 or so years, the house market recovers, they gain on the uptick potentially doubling their money. And if the house doesn’t appreciate that quickly, they are still in a better area than before, possible with a better school system.  Only the banks lose out, wow, that is tough.  I live in an area where the houses didn’t fall much in value, so the people in my area are not presented with that immediate temptation.

Depending on the amount saved in such a transaction, that could be a big temptation.  I don’t know if the damage to your reputation would be worth that… but perhaps it is, it’s a hard choice.  In the past, there would be consequences for skipping out on your debt like that.  I bet if you were in a different country, that wouldn’t be allowed.  But in our country, most of the blame seems to be directed towards the banking system.  We the people, were just innocent lambs lead by the noses to be slaughtered.   I think the government underestimates some of us…  Some people, (probably most of use reading financial blogs) feel like we have been getting the short end of the stick lately, with government programs that benefit just a few of us, and not equally distributed like it should be.

While I don’t agree with the tactic above, I can see the financial logic and temptation that is presented and if you’re upset with the banking system or government…  Hmmm…

 

For most areas of the country though, below are some things to consider.

Money Reasons not to walk away from your mortgage:

  • Damage will be done to your credit score
  • Banks will be cautious to loan you money in the future
  • Eventually, the value of your house will rise again
  • You’ll regret leaving, especially if you hurt your neighborhood
  • You’ll have a reputation as a non-trustworthy individual, forever…
  • People will pity you and think that you can’t control your money
  • Ethics!

 

Sad, I hope this trend of strategic defaults, doesn’t catch on much more than it has, else wise, we might have more systemic risk problems down the road.  Another possibility might be longer stagnation in the housing market…

-D

Cable Company Problems

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Wow!  I might have to re-evaluate my blogging system configuration!  A good portion of today, my site wasn’t reachable by the internet.

Here is my current configuration:

  • Linux server in a virtual environment – fine
  • VirtualBox as the Virtual environment – fine
  • Dlink router -(I’d prefer a Linksys) – fine
  • Local cable company, and a non-static ip address – problem
  • Zoneedit account (free) – fine

Okay, the problem is with my local cable company, and the fact that I only have a non-static ip address.  It took about 45 minutes for the new ip address I got assigned to propagate to all of the other DNS servers.  In the mean time, nobody can hit my blog site.

For now, this is something that I will have to live with, but eventually, I’d like to get a permanent static ip address.

Well so much for today 🙁

-D

How To Eat Out Cheaply At Lunch With Co-workers

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I broke down and decided to go to lunch with the guys.

We ended up going to Macaroni Grill.  A great restaurant, but a bit more pricey than I like to spend at lunch.  While the bulk of the group I was with bought meals that were over $12, I decided I didn’t want to spend that much.

On the menu, I usually go to the soup section to save money.  Low and behold, they have listed a cup of soup for $3.59.  The portion was very large for a cup, but not enough to fill me up.  But ahh, the bread, the combination of the bread and the soup more than satisfied me.  And it was tasty to boot.

So the total lunch cost me $5.59.  I gave the waitress a $2.00 tip (that’s a 55% tip) , she was really good, and deserved at least that much.  Beside, I always feel kind of cheap if I don’t at least tip at a minimum $1.00 for food.

I justify my tipping about by the following logic: she still had to serve me just as much as the other (silverware, drink, bread, bread, dish, etc).  So the quality and quantity of work she prepared getting mey food was the same as the other guys…  If she didn’t do a good job, I still would have tipped her at least a dollar.

I’m pretty frugal about a lot of things, but giving fair tips for the amount of work performed is one area that I’m not…

Library Savings

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I’m lucky, that I work close to a library (it’s about 2 miles away from work).  My work library has an added bonus!  I found a special little spot in the library, that has a peacefully homey feeling to it!  It a small nook that looks like it could be a family room with a nice fireplace as the center focal point.

Much like superman’s fortress of solitude, I go here for lunch to escape the stress of work!  I find that the trip, which is less than 2 minutes drive, often leaves me refreshed and I go back to work with new vigor, ready to get back to the rat race.

Library Fireplace

Library Fireplace

 

While I’m at the library, I typical do the following for free:

  • Read magazines that I’m interested in
  • Surf the web and enter/edit this blog
  • Walk back to the pond behind the library
  • Sit and read a book out on the patio
  • Read the newspaper
  • Check out books, CD, DVDs, Audio books
  • Play Xbox with Kinect while I’m there (not often though)
  • Request books from other libraries
  • Check out software (but it’s mostly old stuff)
  • Check out the Leapster cartridges (wish they had DS ones)
  • For the kids, I check out board games, and activity kits
  • Some libraries (not this one) even have a weekly movie night

These are the reasons I go to the library. But probably my favorite reason for going to the library is for the 3 day DVD selection!

Some libraries now offer 3 day videos!

The way this works is when the library gets new DVDs, the videos are tagged 3 day videos.  What this means is instead of people checking them out online, they have to come in and pick them up first come, first serve.  People can then checkout the videos (both DVD and VHS) only for 3 days and only 2 at a time.

I know many think that the library is nerdy, but it’s also a very frugal way to go!

Check it out!

MR